Review of the Provider Market for Mental Health Services
Report commissioned by the Department of Health
September 2012
Contents
Executive Summary ... 6
Objectives and scope ... 6
Methodology ... 7
Policy context ... 7
Project findings ... 7
Patterns of investment ... 7
Survey of commissioners and providers ... 8
Responses from the Delphi exercise ... 8
Discussion ... 9
Conclusion and recommendations ... 10
Section One: Introduction ... 13
Objectives of the review ... 13
Scope of the review ... 14
Section Two: Methodology ... 15
Overview ... 15
Market segmentation ... 15
Quantitative analysis of finance and activity ... 16
E-survey of commissioners and providers ... 16
Delphi exercise ... 17
Project review workshop ... 18
Strengths and weaknesses of the methodology ... 18
Section Three: Policy Context ... 19
Health and Social Care Act 2012 ... 19
Quality, Innovation, Productivity and Prevention (QIPP) ... 19
Any Qualified Provider (AQP) ... 20
Personal health budgets ... 20
No Health Without Mental Health ... 21
Mental Health Payment by Results (PbR) ... 21
Section Four: Project Results ... 23
The current landscape of NHS-funded mental health provision in England ... 23
Common mental health problems ... 23
Serious and enduring mental illness ... 25
Secure and Psychiatric Intensive Care Unit Services ... 32
Services for organic mental health problems ... 35
Organic Mental Health Problems - Community ... 38
Organic Mental Health Problems - Inpatient ... 40
Addiction Services ... 42
Adult Eating Disorder Services ... 44
Child and Adolescent Mental Health Services... 45
Summary and Observations ... 47
Survey of Commissioners: Contracting Arrangements ... 51
Survey of Providers: Contracting Arrangements ... 53
Barriers to Entry and Movement in the NHS-Funded Mental Health market ... 54
Block Contracts ... 54
Monopoly of statutory providers ... 55
Absence of a tariff in mental health services ... 56
NHS terms and conditions ... 56
Tendering……… ... 57
‘Unsophisticated’ mental health commissioning ... 57
Integration and partnership working ... 58
Future Trends in Market Development and Implications for Policy Development ... 62
Factors driving the current market ... 62
Future Trends ... 67
Section Five: Discussion ... 71
Implications for Recommendations ... 75
Section Six: Conclusion and Recommendations ... 77
Recommendation one: training for commissioners ... 77
Recommendation two: Involvement of service users and carers ... 78
Recommendation three: simplify tendering and procurement processes for smaller contracts ... 79
Recommendation four: develop a phased timetable for the supported roll-out of Any Qualified Provider in mental health services ... 80
Recommendation five: partnerships and integration ... 80
Recommendation six: continuity of service ... 81
Recommendation seven: consistent data-gathering ... 81
Recommendation eight: outcome data ... 82
Conclusion ... 82
Bibliography ... 84
Publications ... 84
Websites ... 85
Datasets ... 85
Appendix A: Participants in the Delphi Exercise ... 86
Stage Three Participants ... 88
Appendix B: Technical Note – The Herfindahl Index ... 89
Appendix C: Proposals to address current barriers to entry in the mental health market – ranked by type of organisation- full responses ... 90
Appendix D: Factors that determine the range of services offered by providers – ranked by type of organisation ... 95
Appendix E: Factors that should determine the range of services offered by providers – ranked by type of organisation ... 99
Appendix F: Expected changes in the structure of the mental health market in the next 5 Years - ranked by type of organisation ... 102
Figure 1: Market Segmentation ... 16
Figure 2: Delphi responses ... 18
Figure 3: Total investment in IAPT - 2010/11 (£000s) ... 24
Figure 4: Total investment in IAPT - 2010/11 (%) ... 24
Figure 5: Total investment in IAPT - 2010/11 (£000s) ... 24
Figure 6: Total PCT investment in Community Mental Health Teams, Assertive Outreach Teams, Early Intervention Teams and Crisis Resolution and Home Treatment Teams (£000s) ... 26
Figure 7: Total PCT Investment in Community Mental Health Teams, Assertive Outreach Teams, Early Intervention Teams and Crisis Resolution and Home Treatment Teams (%) ... 26
Figure 8: Total PCT Investment in Community Mental Health Teams, Assertive Outreach Teams, Early Intervention Teams and Crisis Resolution and Home Treatment Teams .... 27
Figure 9: Herfindahl Index – Community Mental Health Teams, Assertive Outreach Teams, Early Intervention Teams and Crisis Resolution and Home Treatment Teams – 2010/11 ... 28
Figure 10: Total PCT iInvestment in adult acute inpatient services -2010/11 (£000s) ... 29
Figure 11: Total PCT investment in adult acute inpatient services -2010/11 (%) ... 29
Figure 12: Total PCT investment in adult acute inpatient services -2010/11 (£000s) ... 30
Figure 13: Herfindahl index - adult acute inpatient services – 2010/11... 31
Figure 14: Total PCT investment in Psychiatric Intensive Care Unit (PICU) and low & medium secure services - 2010/11 (£000s) ... 32
Figure 15: PCT investment in PICU and low & medium secure services - 2010/11 (%) . 33 Figure 16: Total PCT investment in PICU and low & medium secure services - 2010/11 (£000s) ... 33
Figure 17: Independent sector – national market for medium secure beds ... 34
Figure 18: Independent sector – national market for medium secure beds (%) ... 34
Figure 19: Total PCT investment in older peoples mental health services -2010/11 (£000s) ... 35
Figure 20: Total PCT investment in older peoples mental health services - 2010/11 (%) 36 Figure 21: Total PCT investment in older peoples mental health services - 2010/11 (£000s) ... 36
Figure 22: Herfindahl index – older peoples mental health services – 2010/11 ... 37
Figure 23: Total PCT investment in memory assessment services – 2010/11 (£000s) ... 38
Figure 24: Total PCT investment in memory assessment services -2010/11 (£000s) ... 38
Figure 25: Herfindahl index – memory assessment services – 2010/11 ... 39
Figure 26: Total PCT investment in older adult acute inpatient services – 2010/11 ... 40
Figure 27: Total PCT investment in older adult acute inpatient services - 2010/11 (£000s) ... 41
Figure 28: Herfindahl index – older adult acute inpatient services – 2010/11 ... 41
Figure 29: Spend on Substance Misuse – 2009/10 ... 42
Figure 30: Spend on substance misuse by SHA region - 2009/10 ... 43
Figure 31: National market for adult eating disorder beds ... 44
Figure 32: National market for adult eating disorder beds ... 44
Figure 33: Spend on CAMHS in 2009/10 ... 45
Figure 34: Spend on CAMHS ranked by SHA – 2009/10 ... 46
Figure 35: Total PCT investment in adult and older peoples mental health services - 2010/11 (£000s) ... 47
Figure 36: Statutory and non-statutory market share across the mental health care continuum ... 48
Figure 37: Total PCT Investment in adult and older peoples mental health services - 2010/11 (%) ... 49
Figure 38: Total PCT Investment in adult and older peoples mental health services - 2010/11 (£000s) ... 49
Figure 39: Change in direct services investment 02/03 to 10/11 ... 50
Figure 40: Commissioner contracting arrangements by market segment ... 51
Figure 41: Commissioner contracting arrangements by market segment (%) ... 52
Figure 42: Contracting arrangements survey –statutory providers by market segment .... 53
Figure 43: Contracting arrangements survey – statutory providers by market segment .. 53
Figure 44: Barriers to entry in the mental health market – ranked by type of organisation ... 59
Figure 45: Top 8 proposals to address current barriers to entry in the mental health market – ranked by type of organisation ... 60
Figure 46: Top 8 factors that determine the range of services offered by providers – ranked by type of organisation ... 63
Figure 47: Top 8 factors that should determine the range of services offered by providers – ranked by type of organisation ... 65
Figure 48: Top 8 expected changes in the structure of the mental health market in the next 5 Years - ranked by type of organisation... 68
Figure 49: Policy initiatives expected to impact on the mental health market – ranked by type of organisation ... 70
Figure 50: Ranking of emerging project recommendations ... 75
Executive Summary
Mental health services represent a significant area of expenditure in the NHS. In 2011/12, total investment in adult mental health services in England totaled £6.629 billion1. Mental health services are tremendously diverse, from the provision of brief interventions in the form of talking therapies for people with anxiety and depression, longer inpatient stays in secure units, the treatment of children with behavioural problems, through to the care of older people with dementia.
Whilst the vast majority of these services are delivered by statutory providers, there are numerous independent organisations providing NHS-funded mental health care, both from the for-profit and not-for-profit sector, across almost the full spectrum of provision. These range from large national chains, to small local charities and social enterprises.
The Department of Health commissioned the NHS Confederation’s Mental Health Network and Mental Health Strategies to produce this report, which provides an analysis of the mental health market in England. This research that forms the basis for this report was carried out by Mental Health Strategies over the period September 2011 to March 2012.
The government has committed to extending patient choice of Any Qualified Provider2 for appropriate services, where qualified providers meet NHS service quality requirements, prices and normal contractual obligations. However, in many local health economies, the choice available to mental health service users as to who provides that service remains limited.
Understanding how the market in mental health works is critical - both for the development of future government policy, as well as for the implementation of existing policy relating to competition and choice. Ensuring Clinical Commissioning Groups (CCGs) have a clear understanding of the way in which the market currently operates in the mental health sector will be central to developing effective commissioning arrangements and examining how a more level playing field for providers might be achieved.
Objectives and scope
The review had three core objectives:
1. To provide policymakers with a clear, comprehensive analysis of the current landscape of NHS-funded mental health provision in England.
2. To assess, at a general and segment-specific level, the barriers to effective competition, including provider entry and exit.
3. To indicate possible future trends in market development and their implications for policy development.
The scope of the review includes NHS-funded mental health services for people of all ages (excluding learning disability services, high secure services, and services which are not funded as specialist mental health services by NHS commissioners).
1 Mental Health Strategies (2012), 2011/12 national survey of investment in adult mental services
2 Department of Health (July 2011),Liberating the NHS: greater choice and control - Government response. Extending patient choice of provider (Any qualified provider). Available at:
<http://www.dh.gov.uk/en/Consultations/Responsestoconsultations/DH_125442>
Methodology
The project team chose to employ a mixed methodology, including the following elements:
• Quantitative analysis: An analysis of current patterns of investment and activity flows across thirteen market segments3
• E-Survey: An e-survey of commissioners and providers of mental health services to ascertain common currently used contracting arrangements across the thirteen market segments.
, using a variety of secondary sources of quantitative data.
• Delphi exercise: A Delphi exercise was undertaken with key stakeholders on current challenges, barriers and trends within the market are.
In January 2012, a workshop was held to review the project’s emerging findings and recommendations. The views of stakeholders attending that workshop from contributed to both the findings and the final recommendations of the review.
Policy context
The report considers the broader policy context for the market and mental health services, including the relevance of recently passed legislation (the Health and Social Care Act 20124). We also examine the importance of the quality and efficiency agenda (including the ’Nicholson Challenge’ and QIPP5), the planned roll-out of personal health budgets and the implementation of the mental health strategy, No Health Without Mental Health6. The report also examines government policy relating to the extension of greater patient choice, the introduction of Any Qualified Provider, the implementation of Payment by Results, as set out in the 2010 White Paper, Equity and Excellence: Liberating the NHS7
Project findings
.
Patterns of investment
In the financial year 2010/11, total investment of PCTs in adult and older people’s mental health services was reported to be £7.19 billion. Of this investment 77% (£5.57) billion was reported to be with NHS providers, with 22% (£1.56 billion) with non-statutory providers, and 1% with local authorities. There is some variation by Strategic Health Authority (SHA) region with statutory providers’ overall market share ranging from a high of 86.1% in London, to a low of 71.6% in the North West8.
3 For the purposes of the review the mental health market was divided into thirteen segments.
Further detail on this is contained in section two of the report, which outlines the methodology employed.
4 HM Government (2012), Health and Social Care Act 2012. Available at: <
http://www.legislation.gov.uk/ukpga/2012/7/contents/enacted>
5 Department of Health (2011), Quality and Productivity [online – accessed 20th May 2012].
Available at: <http://www.dh.gov.uk/en/Healthcare/Qualityandproductivity/QIPP/index.htm>
6 HM Government (2011), No Health Without Mental Health. Available at:
<http://www.dh.gov.uk/prod_consum_dh/groups/dh_digitalassets/documents/digitalasset/dh_12405 8.pdf>
7 Department of Health (12 July 2010), Equity and Excellence: Liberating the NHS. Available at: <
http://www.dh.gov.uk/en/Publicationsandstatistics/Publications/PublicationsPolicyAndGuidance/DH _117353>
8 Mental Health Strategies (unpublished), Dataset: Adult and Older People’s National Mental Health Finance Mapping Exercise 2010/11.
Secondly, what is clear from the analysis of patterns in investment set out in this report, is that (in general) non-statutory providers primarily compete for business at the two
extremes of the care continuum.
It is clear there are a set of segmented markets for mental health services. Market structure, participation and concentration varies by segment and region. For example, in Improving Access to Psychological Therapy (IAPT) services, 26% (£44 million) of
investment in 2010/11 was reported to be placed with non-statutory providers and 73%
(£123 million) with statutory providers9. However, this pattern varied significantly by region. For example, in the North East SHA region over half of the NHS investment (53%) in IAPT services was placed with non-statutory providers10.
Similarly, at the other extreme of the continuum, the markets for medium secure services and eating disorder also have comparably high levels of non-statutory provision.
Investment in ‘core’ community services for serious and enduring mental illness (community mental health teams, assertive outreach teams, crisis resolution home
treatment and early intervention in psychosis) shows that nationally 97.6% of the just over
£1 billion NHS (PCT) investment is with statutory providers. NHS South Central does not report any investment in these services with non-statutory providers. North West and West Midlands SHA are the highest investors with non-statutory providers, albeit both spend over 90% with statutory providers11. There has been a marked change over the past decade in the distribution of adult services investment, with growth in secure services and psychological therapies matched by a decline in investment in more traditional
inpatient services, Community Mental Health Teams and day services.
Survey of commissioners and providers
Our survey of contracting arrangements found a substantial emphasis on local block contracts, but with a marked difference between market segments. Data was provided by 14 PCTs – totaling £923 million of investment. Of this total investment 75% was reported to be via through block contracts12. Secure services are mostly organised via regional specialist commissioning, and there is a large presence of cost and volume and named patient contracts in eating disorders and in Child and Adolescent Mental Health Services (CAMHS).
Survey results also indicated that statutory providers currently keep a very large majority of provision in-house. Only in eating disorders were a substantial volume of subcontracts reported. 94% of the total spend identified by statutory providers (identified within the e- survey) were reported to be on services provided in-house.
Responses from the Delphi exercise
A Delphi exercise was undertaken with key stakeholders on current challenges, barriers and trends within the market are. Appendix A sets out the job titles of those people who took part in this exercise in each of the three stages. This section outlines the main
findings from that exercise. In overall rank order, the main barriers to entry and movement were considered by respondents to be:
9 Ibid.
10 Ibid.
11 Ibid.
12 Detailed responses to the survey of commissioners and providers conducted as part of the review can be found in section four.
1. Block contracts
2. The monopoly of statutory providers
3. Poor integration and partnership working
4. ‘Unsophisticated’ mental health commissioning
5. Absence of a tariff in NHS mental health services
6. NHS terms and conditions 7. Infrastructure and tendering 8. NHS financial stringencies 9. NHS regulatory framework 10. Attitudes and strategies of
providers
11. Access to buildings and capital
Respondents suggested that current mental health services remain largely determined by historical patterns of provision and previous investment decisions – tied closely to long- standing block contracts. Respondents considered that the main driving forces within the market are historical arrangements, previous national policy initiatives and a desire to keep services in the “NHS family”.
When asked about future trends, participants thought the following developments, in rank order, would impact on the market for mental health services:
1. Reduction of block contracts 2. Move from inpatient to community
care
3. Consolidation/merger of NHS Trusts
4. Increased competition 5. Increased choice
6. Integration of health and social care
7. Increased role for the non- statutory sector
8. Sub-contracting of services by NHS Trusts
9. Improved service quality 10. Improved partnership working
between statutory and non- statutory providers
11. Development of integrated mental health and physical health trusts 12. Decreased role for the non-
statutory sector
There were a range of differences between responses from the various sectors of
respondents. For example, sub-contracting of services was considered a more likely trend by providers than by commissioners. Providers were also more immediately conscious of the prospect of consolidation or mergers of NHS providers. Commissioners were likelier to be conscious of increased choice, and of the potential role of the non-statutory sector.
Discussion
We would suggest that it is important to understand the following seven fundamental issues about the current market for mental health services:
1. The current market for mental health services is not single national market – it is a set of overlapping geographical and service sectors.
2. There is a substantial historical lag in the way services are delivered: sector- and region-specific ways of doing things tend to continue, whether these remain the best ways of doing things or not.
3. The influence of commissioning on service development has been stronger where there have been clear national policies, and weaker in sectors where providers have developed services not in response to clear commissioning plans – but, it should be stressed, the relative power of commissioners and providers is very variable by sector and location.
4. People who use services have less influence over their planning and delivery than many would prefer, both at an individual and community level.
5. The complex, long-term and integrated nature of many ‘core’ mental health services makes it difficult for local competitive markets to emerge.
6. Some areas of the market for mental health services are concentrated, which has important implications for commissioners.
7. There has been a long standing trend in patterns of provision moving from more intensive and more aggregated forms of care, to less intensive and more
personalised forms of care.
Building on those observations, we then must consider our recommendations. In doing so, we acknowledge that there are a diverse range of views amongst policy makers and providers around issues of competition. For those who seek a more competitive market for mental health services, the above data may suggest excessive dominance by statutory providers in most regions and sectors – and a need for more formal emphasis on mechanisms which could open up the market. Those mechanisms could include compulsory competitive tendering, significant widening of the Any Qualified Provider programme, and enabling equal access to, what are often viewed as, favourable terms and conditions available to statutory sector employees and providers, such as the NHS pension scheme or the Clinical Negligence Scheme for Trusts.
For those who seek to protect a substantial core service within geographically-based integrated statutory providers, the above data may suggest a level of fragmentation already to be found in some sectors of service. From this perspective, observers may conclude that the measures in the above paragraph will simply heighten that risk – and emphasis should be given instead to work to improve quality, value and integration within existing provider structures.
For those who hold views in between those two poles, competition may be viewed as having a role to play in improving services, but as a means to improving outcomes for service users, as opposed to an end in itself. Creating a fairer ‘playing field’ to allow providers of different types to compete on more equal terms will be necessary, alongside reforming financial incentives to support quality improvement, personalisation and
integrated care.
Conclusion and recommendations
The final section of the report highlights eight important and overarching issues for the Department of Health, NHS Commissioning Board and wider health service to address.
This review did not set out to find evidence either for or against the idea of increasing competition in the provision of mental health services. The recommendations arising from the review are limited to those actions, which would, in our view, strengthen the
functioning of the mental health market.
• Recommendation one: training for commissioners.
o For the NHS Commissioning Board to ensure that CCGs have access to high quality support and training in mental health commissioning.
• Recommendation two: involvement of service users and carers.
o At a local level, Health and Wellbeing Boards and CCGs will want to work closely with service users and carers, together with the wider public, in conducting local Joint Strategic Needs Assessments and developing mental health commissioning plans.
o Providers will want to ensure that their involvement of service users and carers in the design and delivery of mental health services is as robust as possible.
o Commissioners and providers of NHS services will want to consider how they engage with new structures, such as local Healthwatch, and how
these groups can feed into the development of commissioning and service development plans for mental health services.
o The NHS Commissioning Board will want to ensure that they also involve service users and carers in the commissioning of specialist mental health services at a national level, and consider how they hold CCGs to account for involving service users and carers in their area.
• Recommendation three: simplify tendering and procurement processes for smaller contracts.
o The NHS Commissioning Board, in tandem with CCGs, will want to consider where opportunities lie to stream-line and simplify NHS
procurement and tendering processes, where this can be justified by the size and nature of the service under consideration.
• Recommendation four: develop a phased timetable for the supported roll-out of Any Qualified Provider in mental health services.
o The NHS Commissioning Board and Department of Health, working with stakeholders within the health service, should develop a phased timetable for the application and roll out of Any Qualified Provider in mental health services.
• Recommendation five: partnerships and integration.
o The NHS Commissioning Board, and CCGs, should encourage further partnership working and joint ventures between statutory NHS and non- statutory providers – through initiatives such as supply chain management.
Monitor will want to consider how issues of competition and integration in mental health are addressed in their forward work programme.
• Recommendation six: continuity of service.
o CCGs will want to consider where areas of mental health provision are highly concentrated, and how continuity of provision can be best ensured in the event of a provider exiting the market. The Department and Monitor will want to consider the implications of market concentration for their future work.
• Recommendation seven: consistent data-gathering
o Ensure that the gathering of all activity and performance data is consistent across all types of provider, whilst ensuring overall burden of data
collection is addressed.
• Recommendation eight: outcome data
o The Department of Health and NHS Commissioning Board should work to develop consistently used measures of outcomes, including for recovery, for use in mental health services with the support of the sector.
o Ensure that national datasets include as much outcome-related data as possible, whilst remaining mindful not to increase overall burden of data collection on providers.
This review set out to deliver a clear, comprehensive analysis of the current landscape of NHS-funded mental health provision in England, to assess barriers to effective
competition and to indicate possible future trends.
Understanding how the market in mental health works will be critical both for the
development of future government policy, and the implementation of existing policy in the area of competition and ensuring choice for service users. Ensuring CCGs have a clear understanding of the way in which the market currently operates in the mental health sector will be central to developing effective commissioning arrangements.
Our conclusions and recommendations, based on both quantitative and qualitative analysis, including in depth work with commissioners and providers, help form a basis for moving forward within the current policy context.
Section One: Introduction
Mental health services represent a significant area of expenditure in the NHS. In 2011/12, total investment in adult mental health services in England totaled £6.629 billion13. Mental health services are tremendously diverse, from the provision of brief interventions in the form of talking therapies for people with anxiety and depression, to long inpatient stays in secure units, treatment of children with behavioural problems, to care of older people with dementia.
Whilst the vast majority of these services are delivered by statutory providers, there are numerous independent organisations providing NHS-funded mental health care, both from the for-profit and not-for-profit sector, across almost the full spectrum of provision. These range from large national chains, to small local charities and social enterprises.
The Department of Health commissioned the NHS Confederation’s Mental Health Network and Mental Health Strategies to produce this report, which provides an analysis of the mental health market in England.
The government has committed to extending patient choice of Any Qualified Provider14 for appropriate services, where qualified providers meet NHS service quality requirements, prices and normal contractual obligations. However, in many local health economies, choice remains limited. The bulk of services in local areas are often provided by a single statutory organisation. Choice is often interpreted as meaning choice between services offered by a single provider, rather than choice between providers. Moving to an Any Qualified Provider model will therefore present practical challenges in terms of implementation in the mental health sector.
Understanding how the market in mental health works will be critical both for the development of future government policy, and the implementation of existing policy in the area of competition and ensuring choice for service users. Ensuring Clinical Commissioning Groups (CCGs) have a clear understanding of the way in which the market currently operates in the mental health sector will be central to developing effective commissioning arrangements.
This review was carried out by Mental Health Strategies over the period September 2011 to March 2012. This report sets out the methodology used, an assessment of the broader policy context. The review’s findings are followed by a discussion of their implications, and a short set of recommendations arising.
Objectives of the review
This review has three core objectives:
1. To provide policymakers with a clear, comprehensive analysis of the current landscape of NHS-funded mental health provision in England.
2. To assess, at a general and segment-specific level, the barriers to effective competition, including provider entry and exit.
3. To indicate possible future trends in market development and their implications for policy development.
13 Mental Health Strategies (2012), 2011/12 national survey of investment in adult mental services
14 Department of Health (July 2011), Liberating the NHS: greater choice and control - Government response. Extending patient choice of provider (Any qualified provider). Available at:
<http://www.dh.gov.uk/en/Consultations/Responsestoconsultations/DH_125442>
Scope of the review
The scope of the review includes NHS-funded mental health services for people of all ages, including:
• Services to improve access to psychological therapies (IAPT), secondary, and tertiary care.
• Mental health needs of all types (clusters 1-21 in the Payment by Results framework).
• Forensic / secure services.
• Inpatient and community services.
The scope of the review specifically excluded learning disability services, high secure services, and services which are not funded as specialist mental health services by NHS commissioners. The scope of the project also did not include social care services and services commissioned by local authorities.
Section Two: Methodology
This section explains the methodology used in the review, and provides a brief assessment of its strengths and limitations.
Overview
The project brief centred on producing an analysis of the current landscape of NHS- funded mental health provision in England, along with an assessment of barriers to effective competition and possible future trends. The timescale for the work was relatively short, with the review carried out over the period of Autumn and Winter 2011/12.
The project team chose to employ a mixed methodology, including the following elements:
• Quantitative analysis: An analysis of current patterns of investment and activity flows across thirteen market segments15
• E-survey: An e-survey of commissioners and providers of mental health services to ascertain common currently used contracting arrangements across the thirteen market segments.
, using a variety of secondary sources of quantitative data.
• Delphi exercise: A Delphi exercise was undertaken with key stakeholders on current challenges, barriers and trends within the market are.
In January 2012, a workshop was held to review the project’s emerging findings and recommendations. The views of stakeholders attending that workshop from contributed to both the findings and the final recommendations of the review.
Further details on each of those stages of the project are set out later in this section, along with an assessment of the strengths and limitations of the methodology employed.
Market segmentation
For the purposes of the review the mental health market was divided into thirteen segments, set out in figure one below. This segmentation was chosen as it reflects the current way services are most commonly organised, marketed and delivered – an approach endorsed by early consultation with stakeholders. For each of the segments, we have reviewed the market at a national, regional (Strategic Health Authority) and local (Primary Care Trust cluster) level.
15 For the purposes of the review the mental health market was divided into thirteen segments, detailed later in this section.
Figure 1: Market Segmentation
1 Services for common mental health problems (anxiety, depression etc)
2a Services for serious and enduring mental health problems
Inpatient services
2b Community services
3a Secure and PICU services Inpatient services
3b Community services
4a Services for organic mental health problems (dementias)
Inpatient services
4b Community services
5a Addiction services Inpatient services
5b Community services
6a Eating disorder services Inpatient services
6b Community services
7a Child and adolescent services Inpatient services
7b Community services
Quantitative analysis of finance and activity
The following data sources were considered in undertaking the quantitative analysis.
1. Mental Health Strategies: Adult and Older People’s National Mental Health Finance Mapping Exercise (Financial Years: 2002/03 – 2010/11)16
2. Department of Health: Programme Budgeting Reference Cost Based Primary Care Trust Benchmarking Workbook (Financial Year: 2009/10)17
3. NHS Information Centre: Hospital Episode Statistics (Bespoke Tabulation) (Financial Year: 2010/11)
18
4. Laing and Buisson: Mental Health and Specialist Care Services UK Market Report (Financial Year: 2010/11)19
Significant limitations to national data sources were identified in undertaking this project – particularly in relation to financial and activity data on non-statutory sector providers. We have presented the data as fully as practicable, allowing for this.
The quantitative element of the review aimed to present an analysis of current patterns of investment and activity flows across the 13 market segments. A technical note included at Appendix B explains the use of the Herfindahl index in some of our analyses.
E-survey of commissioners and providers
As part of developing an understanding of how the current market operates, and what barriers exist to entry and exist, an important objective of the project was to understand
16 Mental Health Strategies, Dataset: Adult and Older People’s National Mental Health Finance Mapping Exercise 2010/11.
17 Department of Health (2009/10) Programme Budgeting Reference Cost Based Primary Care Trust Benchmarking Workbook. Available at:
<http://www.dh.gov.uk/en/Managingyourorganisation/Financeandplanning/Programmebudgeting/D H_075743#_1>
18 NHS Information Centre, Hospital Episode Statistics - Financial Year 2010/11, bespoke tabulation, unpublished
19 Laing & Buisson (2011) Mental Health and Specialist Care Services UK Market Report: 2010/11 5th edition. Laing and Buisson, London
current contracting arrangements between commissioners and providers of mental health services.
There is currently no national database of contracting arrangements available for mental health services. In order to obtain the required information, the project team therefore undertook an e-survey of commissioners and service providers.
The project team contacted each PCT and PCT cluster in England, asking them to complete an online survey detailing their 2010/11 investment in each of the 13 market segments included within the review. Respondents were asked to estimate the proportion (%) of each market segment, in financial terms, that is commissioned by the following contracting arrangements:
1. Block contract.
2. Cost and volume.
3. Named patient contracts.
4. Specialist commissioning.
The project team also contacted each NHS mental health trust in England and a range of non-statutory providers (including for profits, not for profits and social enterprises), asking them to complete an online survey detailing their 2010/11 spend on mental health
services. Respondents were also asked to breakdown their financial spend in each of the 13 market segments. Finally, they were asked to estimate the proportion (%) of each market segment provided in the following ways:
1. In-house.
2. Via joint ventures / partnerships.
3. Sub-contracted.
Following a poor initial response, commissioners and providers were both sent a simplified e-survey, which asked commissioners to detail their total investment / spend across all services - with no breakdown by market segment.
In total there were 47 responses to the e-survey, including 33 from providers, and 14 from commissioners.
Delphi exercise
A Delphi exercise was also undertaken in order to understand the views of key
stakeholders within the mental health market on current challenges, barriers and trends within the mental health services market. Appendix A sets out the job titles of those people who took part in this exercise in each of the three stages.
The Delphi method is typically used as a means of drawing together and testing the views of participants on a particular topic. Information and responses on the topic(s) under discussion are circulated, in a series of rounds, to interested stakeholders, who comment on it and modify the opinion(s) proposed at each stage until some degree of mutual agreement is reached. It differs from a simple survey in that respondents can see the range of others’ responses, and are therefore able to modify or clarify their own views in the light of the emerging discussion.
The Delphi exercise for this project was undertaken in three rounds. The number of responses at each stage are summarised in figure 2 below, broken down type of
organisation. In the third round of the exercise respondents were also asked to rank order the propositions which had emerged in the previous two rounds.
Figure 2: Delphi responses
Project review workshop
On 24th
Strengths and weaknesses of the methodology
January 2012 a workshop was held to review the project’s emerging findings and recommendations. The evidence from this workshop, which was attended by a wide range of stakeholders from across the sectors concerned, has contributed to both the findings and the final recommendations of the review.
Given the broad objectives of the review, the project team decided to employ a mixed methodology. Combining quantitative analysis of financial activity, a survey and the Delphi exercise allowed the project team to gather a wide variety of rich data.
Whilst the approach was the strongest available, given the resources available to the project, it does have a number of weaknesses which should be acknowledged.
The first relates to the quality of secondary data available, and the considerable gaps that exist in those datasets relating to activity in the non-statutory sector. The current scope of national datasets on financial investment and activity, provides limited information relating to investment and activity in the non-statutory mental health sector.
Secondly, related to the survey of commissioners and providers, it should be
acknowledged that the response rate from commissioners, at 14 total responses, is low.
Given the current changes taking place within commissioning, resulting from the Health and Social Care Act 2012, it is perhaps not surprising that engaging this group has presented significant challenges.
We also recognise that alternative approaches could have been taken with the
segmentation of the market into thirteen groups. Limitations of the available data and time necessitated a pragmatic approach be taken, by using those segments which
commissioners and providers would most readily recognise and for which information could be readily accessed.
Providers - By Type Delphi
Stage PCTs
NHS Trust
For
Profit Voluntary
Social
Enterprise Other Total
One 31 25 6 7 3 6 78
Two 19 19 5 17 3 6 69
Three 14 14 4 7 2 5 41
Section Three: Policy Context
This section of the report provides a summary of the current NHS policy context, in so far as it is material to the report’s subject.
Health and Social Care Act 2012
A number of important structural changes, including new commissioning arrangements20, arise out of the Health and Social Care Act 2012. Whilst the system is in the midst of that transition, CCGs will be under pressure to deliver on the £20 billion of efficiency savings that are needed to be achieved by 2014-15. Key changes include:
• Establishment of Clinical Commissioning Groups (CCGs): CCGs will be held to account for the outcomes they achieve – including mental health outcomes – through the Commissioning Outcomes Framework. Improving the commissioning of mental health services will form a vital element of CCGs’ work to secure
efficiency and value for money. There are concerns amongst stakeholders relating to both the capacity and capability of new CCG commissioners to commission mental health services effectively.
• Establishment of commissioning support structures: Subject to CCG support, there is the potential for wider-scale aggregate commissioning of some mental health services than there is currently, particularly for specialist services of a relatively high-cost low-volume nature.
• Establishment of Monitor as the sector regulator for health services: Monitor will regulate health services to promote and protect the interests of patients. It will do this through licensing providers, ensuring the continuity of services, and addressing anti-competitive behavior.
• Establishment of Public Health England: Creation of a new focus for expertise and activity in epidemiological analysis, and in the identification and promotion of factors which are protective against mental health problems.
• Establishment of Healthwatch: A new route for the involvement of service users and carers in monitoring and influencing the planning and delivery of services, alongside existing national and local voluntary organisations.
• Establishment of Health and Wellbeing Boards: Potential for the influence of local authorities’ to increase over commissioning strategy – mental health services could well be an area of particular interest in many local authority areas.
• Parity of Esteem: The Act includes a commitment to 'parity of esteem' between mental and physical health.
Quality, Innovation, Productivity and Prevention (QIPP)
The QIPP agenda centres on the ‘Nicholson Challenge’, for the NHS to deliver £20 billion of efficiency savings by 2014-1521. Mental health services are expected to contribute an appropriate proportion of this saving, placing a strong emphasis on services’ cost- effectiveness and cost-efficiency. Whilst actions in support of making QIPP savings are not centrally mandated, a number of particular areas have received considerable attention:
20 HM Government (2012), Health and Social Care Act 2012. Available at: <
http://www.legislation.gov.uk/ukpga/2012/7/contents/enacted>
21 Department of Health (2011), Quality and Productivity [online – accessed 20th May 2012].
Available at: <http://www.dh.gov.uk/en/Healthcare/Qualityandproductivity/QIPP/index.htm>
• Focus on acute care pathway: Focus is likely to continue of reducing lengths of stay, closing acute beds where appropriate, plus developing alternatives to
admission, including crisis resolution/home treatment and more community-based short-stay residential services22
• Focus on out of area treatments: There is likely to continue to be pressure on commissioners to reduce the use of both existing and new high-cost low-volume placements, predominantly outside the statutory sector, where clinically
appropriate services (which in very specialist care may not be expected to be available) are available nearer to service users’ homes
.
23
• Focus on acute and mental health integration: Service growth areas are likely to include acute hospital psychiatric liaison services (including, but not limited to, Accident and Emergency liaison); and integrated provision of mental health and physical care in the management of long-term conditions, such as diabetes, chronic obstructive pulmonary disease, and long-term neurological disorders.
.
Any Qualified Provider (AQP)
The government has been clear about its commitment to extend choice in the health service – of treatment, setting and of consultant-led team. As part of this, the government has committed to extending patient choice of Any Qualified Provider (AQP)24 for
appropriate services, where qualified providers meet NHS service quality requirements, prices and normal contractual obligations. So far, extension of the full application Any Qualified Provider policy into mental health has been limited to talking therapies where locally agreed tariffs are in place. However, with the commitment to roll out Payment by Results in mental health, Any Qualified Provider will become in future applicable to a much greater degree25. Implications for the mental health market include:
• Qualification and registration process: All providers will be required to meet equal quality standards.
• Referrers’ offering choice: For service users to be offered a choice of providers, greater clarity will be needed as to the range of providers and services which are available in a given area.
• Competition on quality, not price: This important principle highlights the need to agree common outcome measures across the sector. Improving the consistent capturing and publication of data about services’ outcomes and effectiveness will be critical.
• Adoption for IAPT services: There is potential for increasing the diversity in the type and range of providers offering IAPT services – and an increase in the
existing tendency for these services to be relatively un-integrated with other mental health services in their area.
Personal health budgets
22 Mental Health Network (2010) Efficiency in mental health services: Supporting improvements in the acute care pathway. Available at:
<http://www.nhsconfed.org/Publications/briefings/Pages/Efficiency-in-mental-health-services.aspx>
23 Mental Health Network (2011), QIPP and Mental Health: Reducing the Use of Out of Area Services. Available at: <http://www.nhsconfed.org/Publications/briefings/Pages/QIPP-and-mental- health.aspx>
24 Department of Health (2011), Operational Guidance to the NHS – Extending Patient Choice of Provider. Available online at:
<http://www.dh.gov.uk/prod_consum_dh/groups/dh_digitalassets/documents/digitalasset/dh_12846 2.pdf >
25 Further information / documentation on the AQP policy can be found on the Department of Health Website at: <http://healthandcare.dh.gov.uk/any-qualified-provider-2/ >
The Government has declared its intention to begin a national roll out of personal health budgets26. The NHS must prepare itself for the impact of this policy. Implications for the mental health market include:
• Current evaluation of extension of personal budgets27
No Health Without Mental Health
to healthcare: Greater use of personal budgets has the potential to reinforce the “bite” of the Any
Qualified Provider policy, giving more direct control to service users. There is potential for some mental health service users to prefer non-healthcare
applications of their funds – for example on support to access physical access, green spaces or training/employment in preference to medication or psychological therapies.
No Health Without Mental Health, a cross-government mental health outcomes strategy for people of all ages, was published in February 201128. An implementation framework was published in July 201229. Implications for the mental health sector include:
• Shift to outcomes-focused commissioning: There is an expectation that providers will need to be able to demonstrate the benefits to service users of the care and treatment they are providing. This includes social and vocational outcomes, in addition to “health” outcomes such as symptom reduction.
• Emphasis on community wellbeing: The potential for a shift towards mental health wellbeing and promotion activities. Those services are unlikely to be provided by many existing mental health service providers.
• Emphasis on recovery: There is an expectation that providers will need to demonstrate how they are supporting service users to achieve independence and control over their own process of recovery – notwithstanding, in some cases, continuing symptoms of mental illness.
• Emphasis on safety: Providers will need to demonstrate that their governance processes both reduce the risk of, and ensure appropriate response to, serious untoward incidents.
• Aim to reduce stigma and discrimination: Mental health providers are encouraged to act as local champions on this issue, in the way they recruit and support staff, and in the way they engage with their local communities.
Mental Health Payment by Results (PbR)
The White Paper, Equity and Excellence: Liberating the NHS, said the Department will
"implement a set of currencies for adult mental health services for use from 2012/13, and develop currencies for child and adolescent services". It also committed to "develop payment systems to support the commissioning of talking therapies"30
26 Mental Health Network (2011), Personal health budgets: countdown to roll-out. Available online at: < http://www.nhsconfed.org/Publications/briefings/Pages/Personal-health-budgets.aspx>
. The mental health Payment by Results development national project is now moving into the implementation
27 Department of Health (October 2011), Personal Health Budgets [online – accessed 20th May 2012]. Available at: <http://www.dh.gov.uk/health/category/policy-areas/nhs/personal-budgets/>
28 HM Government (2011), No Health Without Mental Health. Available at:
<http://www.dh.gov.uk/prod_consum_dh/groups/dh_digitalassets/documents/digitalasset/dh_12405 8.pdf>
29 HM Government (2012), No Health Without Mental Health: Implementation Framework. Available at: < http://www.dh.gov.uk/health/files/2012/07/No-Health-Without-Mental-Health-Implementation- Framework-Report-accessible-version.pdf>
30 Department of Health (12 July 2010), Equity and Excellence: Liberating the NHS. Available at: <
http://www.dh.gov.uk/en/Publicationsandstatistics/Publications/PublicationsPolicyAndGuidance/DH _117353>
phase. In October 2011 Payment by Results draft guidance for 2012/13 for mental health was published31.
The introduction of Payment by Results in mental health is a critical part of ensuring AQP can be applied to the mental health sector. This area of work has important implications for the mental health market, including:
• Care clustering: An important first step in improving transparency in the market includes establishing what types of mental health problems are being treated by which teams and services, in which locations.
• Costing of care clusters: Enables an understanding of providers’ cost structures not only by service block, but also by service user group.
• Agreement of care pathways by cluster: Could be a potentially important step in standardising approaches to the delivery of mental health care, and reducing the current substantial variation between localities
• Agreement of local tariffs: In the short-term, likely to be of modest significance, given expectations that commissioners and providers agree arrangements to give some assurance of stability of income for the provider and of stability of
expenditure for the commissioner. In the medium term, with data in which local parties have confidence, this could support increased competition between providers.
• Movement towards a national tariff: The government is committed to developing a national tariff for mental health services. If that can be done successfully, it could create incentives for providers to improve their cost-efficiency and to attract and undertake a greater volume of work. It could also create incentives for
commissioners to reduce referrals, and for providers to distinguish themselves from others by measures of quality.
• Movement towards prime contractor ‘capitation’ funding for particular
groups or pathways, e.g. dementia: CCGs may be interested in contracting on a population/capitation basis for sub-groups or pathways. This would involve
selecting a prime contractor who gives best value and manages risk. This could have the effect of taking significant groups of services locally out of tariff.
31 Department of Health (October 2011), Payment by Results: Draft 2012-13 Mental Health Guidance. Available at:
<http://www.dh.gov.uk/prod_consum_dh/groups/dh_digitalassets/documents/digitalasset/dh_13038 7.pdf>
Section Four: Project Results
This section sets out the review’s findings, structured in accordance with the three core project objectives:
1. To provide policymakers with a clear, comprehensive analysis of the current landscape of NHS-funded mental health provision in England.
2. To assess, at a general and segment-specific level, the barriers to effective competition, including provider entry and exit.
3. To indicate possible future trends in market development and their implications for policy development.
The current landscape of NHS-funded mental health provision in England
Common mental health problems
Within the market analysis, investment in Improving Access to Psychological Therapy (IAPT) services was used as proxy for the common mental health problems market
segment. Non-statutory providers have a significant share of the market for IAPT services.
In 2010/11 PCTs invested £168 million investment in IAPT services, of which 26% (£44 million) was reported to be placed with non-statutory providers and 73% (£123 million) was reported to be placed with statutory providers32.
That pattern varies across the country, as figures 3, 4 and 5 all illustrate. In the North East SHA region over half (53%) of investment in IAPT services was with non-statutory
providers. In the East Midlands and Yorkshire regions over 30% of the investment in IAPT services is with non-statutory providers. The SHA region with the lowest percentage investment with non-statutory IAPT providers is NHS South East Coast.
32 Mental Health Strategies, Dataset: Adult and Older People’s National Mental Health Finance Mapping Exercise 2010/11.
Figure 3: Total investment in IAPT - 2010/11 (£000s)33
Figure 4: Total investment in IAPT - 2010/11 (%)34
Key: Blue = Statutory NHS Orange = Non-statutory NHS Green = Local Authority
33 Ibid.
N.B. the data includes all reported PCT investment from the National Mental Health Finance Mapping exercise for 2010/11, displayed by SHA region. Where Local Authorities are reported to provide services these are services funded by the PCT investment. All local authority investment has been excluded as Local Authority commissioned services were outside the project brief.
34 Mental Health Strategies, Dataset: 2010/11.Op Cit.
Provider Type (£000s)
SHA Region
Statutory NHS
Non- Statutory
NHS
Local
Authority Total
NHS West Midlands 6,795 1,359 0 8,154
NHS North East 6,062 6,780 0 12,842
NHS South East Coast 11,158 1,897 0 13,055
NHS Yorkshire and Humber 9,739 4,807 0 14,545
NHS South Central 11,145 3,492 0 14,637
NHS East Midlands 9,474 5,745 0 15,220
NHS South West 15,103 4,875 879 20,858
NHS East of England 16,226 5,463 0 21,688
NHS North West 18,440 3,609 0 22,049
NHS London 19,014 5,977 0 24,991
ENGLAND 123,156 44,005 879 168,041
Figure 5: Total investment in IAPT - 2010/11 (£000s)
Key: Blue = Statutory NHS Orange = Non-statutory NHS Green = Local Authority
Serious and enduring mental illness
Analysis of investment in ‘core’ community services for serious and enduring mental illness (community mental health teams, assertive outreach teams, crisis resolution home treatment and early intervention in psychosis) found that, nationally, 97.6% of the just over
£1 billion NHS (PCT) investment is placed with statutory providers. NHS South Central did not report any investment in these types of services with non-statutory providers. North West and West Midlands SHA make the most investment with non-statutory providers, albeit both spend over 90% with statutory providers. Figures 6, 7 and 8 illustrate how the picture varies across the country.
35 Ibid.
Figure 6: Total PCT investment in Community Mental Health Teams, Assertive Outreach Teams, Early Intervention Teams and Crisis Resolution and Home Treatment Teams (£000s)36
Figure 7: Total PCT Investment in Community Mental Health Teams, Assertive Outreach Teams, Early Intervention Teams and Crisis Resolution and Home Treatment Teams (%)37
Key: Blue = Statutory NHS Orange = Non-statutory NHS Green = Local Authority
36 Ibid.
37 Ibid.
Provider Type (£000s)
SHA Region
Statutory NHS
Non- Statutory
NHS
Local
Authority Total
NHS North East 54,583 0 1,051 55,635
NHS East Midlands 67,528 252 0 67,780
NHS South Central 68,246 0 0 68,246
NHS South East Coast 76,617 2 0 76,619
NHS South West 85,740 537 13 86,289
NHS Yorkshire and Humber 93,416 1,469 1,869 96,753
NHS East of England 101,867 79 0 101,945
NHS West Midlands 101,906 1,464 5,844 109,214
NHS North West 142,592 6,868 3,273 152,734
NHS London 192,389 378 430 193,197
ENGLAND 984,885 11,048 12,479 1,008,412
Figure 8: Total PCT Investment in Community Mental Health Teams, Assertive Outreach Teams, Early Intervention Teams and Crisis Resolution and Home Treatment Teams38
Key: Blue = Statutory NHS Orange = Non-statutory NHS Green = Local Authority
The market for these types of services, across SHA regions, was found to be most
concentrated in the North East, and least so in the North West, as illustrated in figure 9. A full technical note about the Herfindahl index is included at the end of this report at
Appendix B. Briefly, the Herfindahl Index is a commonly accepted measure of market concentration. It is calculated by squaring the market share of each firm competing in the market and summing the resulting numbers. It can range from 0 to 1.0, moving from a large number of very small firms to a single monopolistic producer. Increases in the Herfindahl index generally indicate a decrease in competition and an increase of market power, and decreases indicate the opposite.
Within the report the Herfindahl index is calculated for various segments of the market at a regional (SHA level). The data sources used to calculate these measures have limitations to their usage, which are again outlined in Appendix B.
A key issue for consideration when considering the Herfindahl index, particularly in the context of mental health services, is the geography of a market. Providers within a
geographic region (SHA) may not in reality ‘compete’. Because of this bigger SHAs with a number of NHS Trusts (e.g. London and the North West) may look more competitive than smaller SHAs with fewer NHS Trusts (e.g. the North East). This is despite the fact that these organisations may not actually compete on core services that are commissioned under block contracts.
38 Ibid.
Figure 9: Herfindahl Index – Community Mental Health Teams, Assertive Outreach Teams, Early Intervention Teams and Crisis Resolution and Home Treatment Teams – 2010/1139
_
With regards inpatient services for serious and enduring mental illness, 94.4% of the NHS (Primary Care Trust) investment in adult acute inpatient services was reported to be placed with statutory providers, compared with just 5.6% of the overall total with non- statutory providers. It should be noted that this figure does not include the commissioning of residential rehabilitation services from the independent sector. The South East Coast region did not report any investment with non-statutory providers. The Strategic Health Authority (SHA) are with the highest percentage investment placed with non-statutory providers was the North West (10.6%). Figures 10, 11 and 12 illustrate this.
39 Ibid.
Figure 1010: Total PCT iInvestment in adult acute inpatient services -2010/11 (£000s)40
Provider Type (£000s)
SHA Region
Statutory NHS
Non-Statutory NHS
Local
Authority Total
NHS North East 32,678 280 0 32,958
NHS South Central 33,394 1,794 0 35,188
NHS South East Coast 37,291 0 0 37,291
NHS East Midlands 44,418 84 0 44,502
NHS South West 49,825 2,695 0 52,520
NHS Yorkshire and Humber 60,416 2,265 0 62,681
NHS East of England 63,364 2,784 0 66,147
NHS West Midlands 63,621 6,370 0 69,991
NHS North West 83,604 9,968 0 93,572
NHS London 145,792 10,062 0 155,854
ENGLAND 614,403 36,302 0 650,705
Figure 111: Total PCT investment in adult acute inpatient services -2010/11 (%)41
Key: Blue = Statutory NHS Orange = Non-statutory NHS Green = Local Authority
40 Ibid.
41 Ibid.
Figure 122: Total PCT investment in adult acute inpatient services -2010/11 (£000s)42
Key: Blue = Statutory NHS Orange = Non-statutory NHS Green = Local Authority
As with community services for serious and enduring mental illness, the market was found to be most concentrated in the North East. In this case the market was least concentrated in London. Figure 13 illustrates the degree of market concentration for these services across the country by SHA area.
42 Ibid.
Figure 13: Herfindahl index - adult acute inpatient services – 2010/1143
_
43 Ibid.
